Exhibit 10.4
CONSULTING AGREEMENT
CONSULTING AGREEMENT, dated as of the 13th day of December,
1996, by and among TOUCHSTONE APPLIED SCIENCE ASSOCIATES, INC., a
Delaware corporation (the "Company"), with a principal place of
business at Fields Lane, Brewster, New York, and PARIS GROUP, LTD.
(the "Consultant"), with a principal place of business at 00 Xxxxxx
Xxxxxx, Xxxxxxxxxxxx, Xxx Xxxx.
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Consultant is in the business of providing
management and financial consulting services to public companies;
WHEREAS, the Company desires to engage the services of
Consultant to provide management and financial consulting services to
the Company, and the Consultant is willing to provide such services,
on the terms and conditions stated herein;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements contained in this Agreement, the parties hereto agree as
follows:
1. Consulting Services.
-------------------
(a) Upon the terms and subject to the conditions contained
in this Agreement, the Company hereby agrees to engage the Consultant,
and the Consultant hereby agrees to perform financial management and
consulting services in order to assist the Company in meeting its
short-term and long-term financial and strategic goals.
(b) The Consultant and the Company shall agree on the
scope and extent of the services to be performed by the Consultant.
The Consultant shall perform such services subject to Federal and
state securities laws and regulations, and applicable rules,
regulations and policies of the National Association of Securities
Dealers, Inc. (the "NASD"), and the Securities and Exchange Commission
(the "Commission").
(c) Without limiting the generality of the foregoing, the
Consultant's services shall include the following:
(i) attending meetings of the Company's Board of Directors
of committees thereof, when requested by the Company;
(ii) at the request of the Company, reviewing, analyzing
and reporting on proposed business opportunities, and attending
meetings regarding the same;
(iii) consulting with the Company concerning on-going
strategic corporate planning and long-term investment policies;
and
(iv) consulting with the Company and advising and assisting
the Company in identifying, studying and evaluating merger,
acquisition, joint venture, strategic alliance, recapitalization
and restructuring proposals.
(d) The Consultant agrees that, during the term of this
Agreement, the Consultant shall devote sufficient time and effort on
behalf of the Company as shall be necessary to effect the intents and
purposes of this Agreement. The Consultant will, at all times,
faithfully and to the best of the Consultant's experience and
abilities, perform all duties that may be required of the Consultant
pursuant to the terms of this Agreement. The Company expressly
acknowledges and agrees that the Consultant's efforts shall be on a
"best-efforts" basis and the Consultant has not, cannot and does not,
guarantee that the Consultant's efforts will have any impact on the
Company's business or that any subsequent financial improvement will
result from his efforts.
(e) The Consultant agrees that the Consultant is not the
agent of the Company and has no power or authority to bind the Company
to any agreement, transaction or other commitment, and the Consultant
shall not represent or warrant to the contrary to any third party.
The Company has the sole right, in the exercise of its business
judgment and discretion, to approve or disapprove of any agreement,
transaction or commitment introduced by the Consultant.
(f) The Consultant shall not issue any press releases or
other public statement regarding the Company without the Company's
prior written approval.
(2) Term. The Agreement shall be for a term of five (5)
----
years from the date hereof, unless earlier terminated. The Company
may terminate this Agreement, at any time, upon 20 days' prior written
notice to the Consultant.
(3) Compensation. As full compensation for its services,
------------
the Company shall cause to be issued to the Consultant as promptly as
practicable after the execution of this Agreement, 100,000 shares of
its common stock (the "Shares"). The Shares shall be restricted
shares and bear a legend in substantially the following form:
"The Shares evidenced by this Certificate have not been
registered under the Securities Act of 1933, as amended, or
applicable state securities laws, and may not be sold,
transferred or encumbered except pursuant an effective
registration statement under the Securities Act of 1933, as
amended, and such state securities laws, or unless an exemption
from such registration is then available".
No later than June 30, 1997, the Company agrees, at its sole
cost and expense, to prepare and file a registration statement on Form
S-3, or on such other form as may be appropriate therefor (the
"Registration Statement") under the Securities Act of 1933, as amended
(the "Securities Act"), registering the Shares with the Commission.
The Company shall use its best efforts to maintain the effectiveness
of the Registration Statement for up to nine (9) months thereafter,
pursuant to which, any of the Shares are being offered, and from time
to time will amend or supplement such Registration Statement and the
prospectus contained therein as and to the extent necessary to comply
with the Securities Act and any state securities statute or
regulation. The Company will also provide the Consultant with as many
copies of the prospectus contained in any such Registration Statement
as it may reasonably request.
4. Expenses. Unless otherwise approved in writing by the
--------
Company, the Consultant shall bear all expenses incurred in connection
with the services to be rendered to the Company.
5. Representations and Warranties of the Consultant. The
------------------------------------------------
Consultant represents and warrants to the Company, as follows:
(a) The Consultant is a corporation, duly organized,
validly existing and in good standing under the laws of their
respective jurisdictions of incorporation. The Consultant has
the corporate power and authority to enter into this Agreement
and to perform the services contemplated hereby.
(b) This Agreement has been duly authorized by all
necessary corporate action of the Consultant. This Agreement
constitutes the legal, valid and binding obligation of the
Consultant, subject to applicable bankruptcy, insolvency,
moratorium and other laws affecting creditors' rights generally
and to general principles of equity. The execution, delivery and
performance of this Agreement does not and will not conflict with
the Certificate of Incorporation or By-Laws of the Consultant, or
any agreement, law, order or regulation to which the Consultant
is subject.
(c) There is no litigation, action, claim or proceeding
pending, or to the knowledge of the Consultant threatened, and
nor order or injunction has been entered, against the Consultant
or any of its directors, officers or stockholders (individually
or in the respective capacities for the Consultant) which arises
out of, or is based upon, any alleged violation or breach of
Federal or state securities laws or regulations or the
regulations or policies of the NASD or any stock exchange.
(d) The Consultant has received and reviewed copies of the
Company's most recent reports under the Securities Exchange of
1934, as amended. The Consultant acknowledges and agrees that the
receipt of capital stock of the Company as compensation under
this Agreement involves a high degree of risk, including the risk
that the Shares may substantially decrease in value. The
Consultant expressly acknowledges and accepts this risk, and is
cognizant of the financial condition and operations of the
Company. The Consultant has had the opportunity to discuss with
the management of the Company the financial condition and
operations of the Company and has had the opportunity to receive
all information which it has deemed necessary in entering into
this Agreement. Accordingly, the Consultant has been able to
evaluate the merits and risks of the Consultant's investment in
the Shares. In entering into this Agreement, the Consultant has
not in any manner directly or indirectly relied on any warranty
or representation by the company, its officers, directors,
agents, legal counsel or accountants concerning the Company
and/or its securities as to matters past, present or future.
(e) The directors, officers and stockholders of the
Consultant are as set forth on Schedule I attached hereto.
6. Representations and Warranties of the Company. The
---------------------------------------------
Company represents and warrants to the Consultant that:
(a) The Company is duly organized, validly existing and in
good standing under the laws of the State of Delaware. The
Company has the corporate power and authority to enter into this
Agreement.
(b) This Agreement has been duly authorized by all
necessary corporate action of the Company. This Agreement
constitutes the legal, valid and binding obligation of the
Company, subject to applicable bankruptcy, insolvency, moratorium
and other laws affecting creditors' rights generally and to
general principles of equity. The execution, delivery and
performance of this Agreement does not and will not conflict with
the Certificate of Incorporation or By-Laws of the Company, or
any agreement, law, order or regulation to which the Company is
subject.
(c) The Company is current in its reporting obligations
under the Securities Exchange Act of 1934, as amended.
7. Non-Exclusive Services; Non-Competition.
---------------------------------------
(a) The Company understands that the Consultant is
currently providing certain advisory and financial consulting
services to other individuals and companies and agrees that the
Consultant is not prevented or barred from rendering such
services to such other entities, subject to paragraph (b) hereof.
In addition, the Consultant understands and agrees that the
Company shall not be prevented or barred from retaining other
persons or entities to provide services of the same or similar
nature as those provided by the Consultant.
(b) The Consultant shall not, during the term of this
Agreement, directly or indirectly, engage or consult with any
business substantially similar to the business of the Company.
The term "engage" shall include, but shall not be limited to
activities as proprietor, partner, principal shareholder,
principal agent, employee or consultant. The Consultant
acknowledges that during the term of this Agreement, the
Consultant shall have access to information, materials and/or
processes confidential and proprietary to the Company and the
Consultant and its employees, agents, attorneys and accountants
shall at all times during the term of this Agreement and
thereafter, maintain the secrecy and confidentiality of all such
information, materials and/or processes acquired or revealed to
them under, pursuant or in connection with this Agreement, except
as to such information which enters the public domain other than
through the actions or omissions of the Consultant, pursuant to
requests from governmental authorities with applicable
jurisdiction, or pursuant to judicial subpoena. Upon termination
of this Agreement, the Consultant will promptly return to the
Company all non-public, proprietary information of the Company,
and all copies thereof.
8. Indemnification.
---------------
(a) The Company agrees to indemnify and hold harmless the
Consultant from and against any and all losses, claims, damages,
liabilities and expenses (including, without limitation
attorneys' fees and costs incurred in the investigation, defense
and settlement of the matter), suffered or incurred by the
Consultant which arises out of this Agreement or otherwise out of
the performance by the Consultant of its obligations hereunder,
unless such losses, claims, damages, liabilities or expenses are
found by a final determination of a court of competent
jurisdiction to have arisen out of gross negligence or
malfeasance of the Consultant in performing its services
hereunder. If, for any reason, the foregoing indemnification is
unavailable to the Consultant, or insufficient to hold it
harmless, then the Company shall contribute to the amount paid or
payable by the Consultant as a result of such loss, claim, damage
or liability in such proportion as is appropriate to reflect not
only the relative benefits received by the Company on the one
hand and the Consultant on the other hand, but also the relative
fault of the Company and the Consultant, as well as any other
relevant equitable considerations. The reimbursement, indemnity
and contribution obligations of the Company under this section
shall be in addition to any liability which the Company may
otherwise have and shall be binding and inure to the benefit of
any respective successors, assigns, heirs and personal
representatives of the Company and the Consultant.
(b) The Company will, to the extent permitted by law,
indemnify and hold harmless the Consultant, its officers and
directors (including any broker or dealer through whom Shares may
be sold) from and against any and all losses, claims, damages,
expenses, liabilities, joint or several, to which they or any of
them become subject under the Securities Act or any equivalent
foreign act or any rule or regulation of any securities exchange
or under any other statute or at common law or otherwise, and,
except as hereinafter provided, will reimburse the Consultant or
other person, if any, for any legal or other expenses reasonably
incurred by it or any of them in connection with investigating or
defending any actions whether or not resulting in any liability,
insofar as such losses, claims, damages, expenses, liabilities or
actions arise out of or are based upon any untrue statement or
alleged untrue statement of a material fact contained in the
Registration Statement, in any preliminary or amended preliminary
prospectus or in the prospectus (or the Registration Statement or
prospectus as from time to time may be amended or supplemented by
the company) or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be
stated therein or necessary in order to make the statements
therein not misleading or any violation by the Company of any
rule or regulation promulgated under the Securities Act or any
equivalent foreign act or any rule or regulation of any
securities exchange applicable to the company and relating to
action or inaction required of the Company in connection with
such registration, unless such untrue statement or omission was
made in such Registration Statement, preliminary or amended,
preliminary prospectus or prospectus in reliance upon and in
conformity with information furnished in writing to the Company
in connection therewith by the Consultant, expressly for use
therein. Promptly after receipt by the Consultant (including any
broker or dealer through whom such shares way be sold) of notice
of the commencement of any action in respect of which indemnity
may be sought against the Company, the Consultant will notify the
company in writing of the commencement thereof, and, subject to
the provisions hereinafter stated, the Company shall assume the
defense of such action (including the employment of counsel, who
shall be counsel reasonably satisfactory to the Consultant), and
the payment of expenses insofar as such action shall relate to
any alleged liability in respect of which indemnity may be sought
against the Company. The Consultant shall have the right to
employ separate counsel in any such action and to participate in
the defense thereof but the fees and expenses of such counsel
shall not be at the expense of the Company unless the employment
of such counsel has been specifically authorized by the Company.
The Company shall not, except with the approval of the Consultant
or any other person indemnified under this section, consent to
entry of any judgment or enter into any settlement which dose not
include as an unconditional term thereof the giving by the
claimant or plaintiff, of a full release to the parties being so
indemnified.
(c) The Consultant agrees to indemnify and hold harmless
the Company (and the Company's officers, directors and agents,
and their respective heirs, successors and assigns) from and
against any and all losses, claims, damages, liabilities and
expenses (including, without limitation attorneys' fees and costs
incurred in the investigation, defense and settlement of the
matter), suffered or incurred by the Company (or such other
persons) which arises out of this Agreement or otherwise out of
the performance by the Consultant of its obligations hereunder or
the failure of the Consultant to perform in accordance with the
terms hereof or the breach by the Consultant of any of its
representations and warranties as of the date such
representations and warranties were made. If, for any reason,
the foregoing indemnification is unavailable to the Company (or
such other persons), or insufficient to hold it harmless, then
the Consultant shall contribute to the amount paid or payable by
the Company (or such other persons) as a result of such loss,
claim, damage or liability in such proportion as is appropriate
to reflect not only the relative benefits received by the
Consultant on the one hand and the Company (and such other
persons) on the other hand, but also the relative fault of the
Consultant and the Company, as well as any other relevant
equitable considerations. The reimbursement, indemnity and
contribution obligations of the Consultant under this section
shall be in addition to any liability which the Consultant may
otherwise have and shall be binding and inure to the benefit of
any respective successors, assigns, heirs and personal
representatives of the Consultant and the Company.
(d) The Consultant will, to the extent permitted by law,
indemnify and hold harmless the Company (including any broker or
dealer through whom the Shares may be sold and officers,
directors and agents of the Company), from and against any and
all losses, claims, damages, expenses, liabilities, joint or
several, to which they or any of them become subject under the
Securities Act or any equivalent foreign act or any rule or
regulation of any securities exchange or under any other statute
or at common law or otherwise, and, except as hereinafter
provided, will reimburse the Company or other person, if any, for
any legal or other expenses reasonably incurred by then or any of
them in connection with investigating or defending any actions
whether or not resulting in any liability, insofar as such
losses, claims, damages, expenses, liabilities or actions arise
out of or are based upon any untrue statement or alleged untrue
statement of a material fact contained in the Registration
Statement, in any preliminary or amended preliminary prospectus
or in the prospectus (or the Registration Statement or prospectus
as from time to time may be amended or supplemented by the
company) or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be
stated therein or necessary in order to make the statements
therein not misleading but only insofar as such statement or
omission was made in reliance upon and in conformity with
information furnished in writing to the company in connection
therewith by the Consultant expressly for the use therein. The
obligations of the Consultant to indemnify the Company shall be
limited to the obligations set forth in the immediately preceding
sentence. Promptly after receipt by the Company (including any
broker or dealer through whom such shares may be sold) of notice
of the commencement of any action in respect of which indemnity
may be sought against the Consultant, the Company will notify the
Consultant in writing of the commencement thereof, and, subject
to the provisions hereinafter stated, the Consultant shall assume
the defense of such action (including the employment of counsel,
who shall be counsel reasonably satisfactory to the Company), and
the payment of expenses insofar as such action shall relate to
any alleged liability in respect of which indemnity may be sought
against the Consultant. The Company shall have the right to
employ separate counsel in any such action and to participate in
the defense thereof but the fees and expenses of such counsel
shall not be at the expense of the Consultant unless the
employment of such counsel has been specifically authorized by
the Consultant. The Consultant shall not be liable to indemnify
any person for any settlement of any such action effected without
Consultant's consent.
(e) The provisions of this Section 8 shall survive the
termination and expiration of this Agreement.
9. Entire Agreement. This Agreement contains the entire
----------------
agreement among the parties wish respect to the subject matter hereof
and supersedes all prior agreements, written or oral, with respect
thereto.
10. Waivers and Amendments. This Agreement may be
----------------------
amended, modified, superseded, canceled, renewed or extended, and the
terms and conditions hereof may be waived, only by a written
instrument signed by the parties or, in the case of a waiver, by the
party waiving compliance. No delay on the part of any party in
exercising any right, power or privilege hereunder shall operate as a
waiver thereof, nor shall any waiver on the part of any party of any
right, power or privilege hereunder, nor any single or partial
exercise of any right, power or privilege hereunder, preclude any
other or further exercise thereof or the exercise of any other right,
power or further exercise thereof or the exercise of any other right,
power or privilege hereunder. The rights and remedies herein provided
are cumulative and are not exclusive of any rights or remedies which
any party may otherwise have at law or in equity.
11. Successors and Assigns; No Assignment by the Consultant.
-------------------------------------------------------
This Agreement shall inure to the benefit of, and be binding upon, the
Company, its successors and assigns. This Agreement is not assignable
by the Consultant as it is intended to secure the personal services of
the Consultant and its employees.
12. Headings. The headings in this Agreement are for
--------
reference purpose only and shall not in any way affect the meaning or
interpretation of this Agreement.
13. Severability of Provision-. The invalidity or
--------------------------
unenforceability of any term, phrase, clause, paragraph, restriction,
covenant, agreement or other provision of this Agreement shall in no
way affect the validity or enforcement of any other provision or any
part thereof.
14. Counterparts. This Agreement may be executed in any
------------
number of counterparts, each of which when so executed, shall
constitute an original copy hereof, but all of which together shall
consider but one and the same document.
15. Notices. All notices to be given hereunder shall be
-------
in writing, with fax notices being an acceptable substitute for mail
and/or and delivery to:
(i) the Company, at:
Touchstone Applied Science Associates, Inc.
Xxxxxx Xxxx
X.X. Xxx 000
Xxxxxxxx, Xxx Xxxx 00000
(ii) the Consultant, at:
Paris Group, Ltd.
00 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, Xxx Xxxx 00000
16. Governing Law. This Agreement shall be governed and
-------------
construed in accordance with the laws of the State of New York
applicable to agreements made and to be performed entirely within such
State.
IN WITNESS WHEREOF, the parties have executed this Agreement
on the date first above written.
TOUCHSTONE APPLIED SCIENCE ASSOCIATES, INC.
By /s/ XXXXXX X. XXXXX
--------------------------------------------
Xxxxxx X. Xxxxx
President
PARIS GROUP, LTD.
By /s/ XXXXXXX X. XXXXX
--------------------------------------------
